Catenaa, February 09, 2026 – China has instructed domestic banks to curb holdings of US Treasury securities, citing rising market volatility and concentration risks. The guidance underscores Beijing’s growing caution toward dollar-denominated assets.
Chinese regulators told major lenders to limit new purchases of US government bonds. Banks with large existing positions should consider paring exposure. The directive applies to commercial lenders, not to state sovereign holdings.
According to U.S. Treasury data, China’s total Treasury holdings stood at $682.6 billion as of November 2025. This is the lowest level since 2008 and about half of the $1.3 trillion peak in 2013.
Despite the decline, China remains the third-largest foreign holder of US Treasuries, behind Japan at about $1.2 trillion and the United Kingdom at roughly $888.5 billion.
The backdrop to the warning is a bond market marked by yield swings. US 10-year Treasury yields have fluctuated amid persistent rate uncertainty. Higher yields can erode the market value of long-dated Treasuries, increasing losses for holders.
China’s broader strategy has seen the sustained sale of US debt. Data show Chinese holdings have fallen more than 10% since early 2025. Analysts say the reduction reflects both strategic diversification and concerns about risk concentration.
Beijing’s move also comes as China’s foreign-exchange reserves exceed $3.35 trillion, the world’s largest, giving authorities flexibility to reallocate assets.
Market participants say any unwinding by Chinese banks will be gradual. A sharp selloff could shock global bond markets and push yields even higher. Still, the signal from Chinese regulators is clear: managing risk is now a priority.
